Group discusses racial barriers to small business success

By ISAIAH GUZMAN - SENTINEL CORRESPONDENT

Friday, November 14, 2008

Small businesses still face significant racial, ethnic and gender disparities. And Santa Cruz is not immune to these trends.

A group of local panelists, including Mayor Ryan Coonerty, led a discussion about these issues before an audience of students, UC Santa Cruz professors and small business owners at the University Inn and Conference Center on Thursday night.

"The future of Santa Cruz depends on small business," Coonerty said.

UCSC professor of economics Robert Fairlie led the discussion with his study about business-ownership disparities in the United States. The other panelists included Teresa Thomae, director of the Central Coast Small Business Development Center, and Carmen Herrera-Mansir, executive director of El Pajaro Community Development Corp.

Fairlie spoke of closing the gap of success between white- and minority-owned businesses, especially given the state of the economy. His study found large differences in business performance based on race. Average sales for white-owned businesses were $440,000, compared with $292,000 for Asians, $141,000 for Latinos and $74,000 for blacks.

Two major factors contributing to the disparities, he found, were education level and startup capital.

"About 17 percent of blacks had a college education or higher," he said. "Then on the flip side, 50 percent of Asians had a college degree or higher."

In order for these disparities to change, Fairlie said there must be an increase in education for minorities, improved access to capital and removal of certain constraints for starting businesses. And removing constraints, Coonerty said, would help minority businesses locally.

Coonerty said changes need to be made in state policies like traffic impact fees and incentives that benefit big businesses more than small ones. The city, he said, needs to find a way of speeding up the permitting process in certain circumstances.

"When you've been laid off and you're trying to start a business," he said, "a six-month hearing process could be the difference of whether or not it makes or breaks you."

Herrera-Mansir said there needs to be more partnering between local agencies and organizations to help minorities succeed in business ownership.

"We could be assured that people will succeed if we have access to education and other resources," she said.

Thomae added that people need to be educated as much on how to be employers as employees.